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Corporate crime update - 21 March 2013

On 10 January 2013, the Japanese FSA announced its decision to fine Japan Advisory, a Tokyo-based investment adviser, ¥370,000 for illegally trading in stock after receiving inside information. The information, supplied by a broker, concerned a public offering of shares by listed company Nippon Sheet Glass in 2010. In particular, investigators found that Japan Advisory had short-sold about $6.8million of the company's shares four days before the company announced a share offering to raise capital that diluted the holdings of existing investors. A sell-off over those four days cut the company's market value by 8%. The case was one of several insider trading cases unearthed by authorities last year after a two-year investigation into allegations of widespread insider trading ahead of public share offerings in Japan.

The FSA was acting on a recommendation from a panel of three judges who had been conducting a hearing on the matter since 29 June 2012 on the advice of the SESC (Securities & Exchange Surveillance Commission). Following discovery of the offence in 2012, Japan Advisory has also had its licence revoked by the Kanto Finance Bureau and was ordered to cease and desist running discretionary funds.

FSA fines individual for market manipulation of multiple stocks

On 29 January 2013, the Japanese FSA announced its decision to fine an individual ¥950,000 for manipulating the stock price of Placo Co Ltd (listed on JASDAQ) and two other companies' stocks. The individual, a man in his thirties and residing in the Kyoto area, was accused of placing share purchase orders for the stocks in question at high prices which he had no intention of paying, thus driving-up the prices of the stocks. This is the first time the FSA has issued a fine in connection with the manipulation of multiple stocks.

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